001-35777
|
45-3449660
|
(Commission
File Number) |
(IRS Employer
Identification No.) |
1345 Avenue of the Americas, 45th Floor
New York, New York |
10105
|
(Address of principal executive offices)
|
(Zip Code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Item 2.02.
|
Results of Operations and Financial Condition.
|
Item 9.01 |
Financial Statements and Exhibits.
|
(d)
|
Exhibits
|
Exhibit
Number |
Description
|
|
Press release, dated February 12, 2019, issued by New
Residential Investment Corp.
|
NEW RESIDENTIAL INVESTMENT CORP.
|
|
(Registrant)
|
|
/s/ Nicola Santoro, Jr.
|
|
Nicola Santoro, Jr.
|
|
Chief Financial Officer
|
§
|
GAAP Net Income of $0.3 million, or $0.00 per diluted share
|
§
|
Core Earnings of $208 million, or $0.58 per diluted share*
|
§
|
Common dividend of $185 million, or $0.50 per share
|
§
|
GAAP Net Income of $964 million, or $2.81 per diluted share
|
§
|
Core Earnings of $815 million, or $2.38 per diluted share*
|
§
|
Common dividend of $693 million, or $2.00 per share
|
4Q 2018
|
3Q 2018
|
Year Ended
December 31, 2018
|
Year Ended
December 31, 2017
|
|||||||||||||
Summary Operating Results:
|
||||||||||||||||
GAAP Net Income per Diluted Share**
|
$0.00
|
$0.54
|
$2.81
|
$3.15
|
||||||||||||
GAAP Net Income
|
$0.3 million
|
$185 million
|
$964 million
|
$958 million
|
||||||||||||
Non-GAAP Results:
|
||||||||||||||||
Core Earnings per Diluted Share**
|
$0.58
|
$0.63
|
$2.38
|
$2.83
|
||||||||||||
Core Earnings*
|
$208 million
|
$215 million
|
$815 million
|
$861 million
|
||||||||||||
NRZ Common Dividend:
|
||||||||||||||||
Common Dividend per Share**
|
$0.50
|
$0.50
|
$2.00
|
$1.98
|
||||||||||||
Common Dividend
|
$185 million
|
$170 million
|
$693 million
|
$609 million
|
• |
Mortgage Servicing Rights (“MSRs”)
|
▪ |
In the fourth quarter, we purchased $19 billion unpaid principal balance (“UPB”) of MSRs, bringing the total amount purchased in 2018 to $114
billion.
|
•
|
Non-Agency Bond Portfolio and Call Rights
|
▪
|
New Residential controls call rights to ~$126 billion of mortgage collateral, representing ~37% of the Non‐Agency market.(1)(2) Approximately $47 billion of our call rights population is currently
callable.(1)
|
▪
|
During the fourth quarter, New Residential executed call rights on 14 seasoned, Non-Agency residential mortgage-backed securities (“RMBS”) deals
with an aggregate UPB of approximately $795 million, and issued two securitizations totaling approximately $1.0 billion UPB.
|
|
▪ |
During 2018, New Residential executed call rights on 88 seasoned, Non-Agency RMBS deals with an aggregate UPB of approximately $2.7 billion.
|
|
▪
|
New Residential completed its first non-qualifying mortgage loan securitization in the fourth quarter with an aggregate UPB of approximately $311
million.
|
•
|
Residential Loans
|
▪
|
In the fourth quarter, we acquired $1.5 billion of re-performing loans from Fannie Mae.
|
•
|
Servicer Advances
|
▪
|
We continued to focus on lowering advance balances during 2018. Advance balances at the end of 2018 were $3.6 billion, representing a 12%
year-over-year decrease.(2)
|
(1)
|
Our call rights may be materially lower than the estimates in this press release and there can be no assurance that we will
be able to execute on this pipeline of callable deals in the near term, or at all, or that callable deals will be economically favorable. The economic returns from this strategy could be adversely affected by a rise in interest rates
and are contingent on the level of delinquencies and outstanding advances in each transaction, fair market value of the related collateral and other economic factors and market conditions. We may become subject to claims and legal
proceedings, including purported class‐actions, in the ordinary course of our business, challenging whether our loan servicing practices and other aspects of our business comply with applicable laws, agreements and regulatory
requirements or challenging our right to exercise our call rights. Call rights are usually exercisable when current loan balance is equal to, or lower than, 10% of its original balance.
|
(2)
|
All data as of December 31, 2018, unless otherwise stated.
|
|
Year Ended December 31,
|
|||||||||||
|
2018
|
2017
|
2016
|
|||||||||
|
(unaudited)
|
|||||||||||
Interest income
|
$
|
1,664,223
|
$
|
1,519,679
|
$
|
1,076,735
|
||||||
Interest expense
|
606,433
|
460,865
|
373,424
|
|||||||||
Net Interest Income
|
1,057,790
|
1,058,814
|
703,311
|
|||||||||
|
||||||||||||
Impairment
|
||||||||||||
Other-than-temporary impairment (OTTI) on securities
|
30,017
|
10,334
|
10,264
|
|||||||||
Valuation and loss provision (reversal) on loans and real estate owned
|
60,624
|
75,758
|
77,716
|
|||||||||
|
90,641
|
86,092
|
87,980
|
|||||||||
|
||||||||||||
Net interest income after impairment
|
967,149
|
972,722
|
615,331
|
|||||||||
Servicing revenue, net
|
528,595
|
424,349
|
118,169
|
|||||||||
Gain on sale of originated mortgage loans, net
|
89,017
|
-
|
-
|
|||||||||
Other Income
|
||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
(58,656
|
)
|
4,322
|
(7,297
|
)
|
|||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
8,357
|
12,617
|
16,526
|
|||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
31,550
|
66,394
|
-
|
|||||||||
Change in fair value of servicer advance investments
|
(89,332
|
)
|
84,418
|
(7,768
|
)
|
|||||||
Change in fair value of investments in residential mortgage loans
|
73,515
|
-
|
-
|
|||||||||
Gain on consumer loans investment
|
-
|
-
|
9,943
|
|||||||||
Gain on remeasurement of consumer loans investment
|
-
|
-
|
71,250
|
|||||||||
Gain (loss) on settlement of investments, net
|
103,842
|
10,310
|
(48,800
|
)
|
||||||||
Earnings from investments in consumer loans, equity method investees
|
10,803
|
25,617
|
-
|
|||||||||
Other income (loss), net
|
(124,336
|
)
|
4,108
|
28,483
|
||||||||
|
(44,257
|
)
|
207,786
|
62,337
|
||||||||
|
||||||||||||
Operating Expenses
|
||||||||||||
General and administrative expenses
|
231,579
|
67,159
|
38,570
|
|||||||||
Management fee to affiliate
|
62,594
|
55,634
|
41,610
|
|||||||||
Incentive compensation to affiliate
|
94,900
|
81,373
|
42,197
|
|||||||||
Loan servicing expense
|
43,547
|
52,330
|
44,001
|
|||||||||
Subservicing expense
|
176,784
|
166,081
|
7,832
|
|||||||||
|
609,404
|
422,577
|
174,210
|
|||||||||
|
||||||||||||
Income Before Income Taxes
|
931,100
|
1,182,280
|
621,627
|
|||||||||
Income tax (benefit) expense
|
(73,431
|
)
|
167,628
|
38,911
|
||||||||
Net Income
|
$
|
1,004,531
|
$
|
1,014,652
|
$
|
582,716
|
||||||
Noncontrolling Interests in Income of Consolidated Subsidiaries
|
$
|
40,564
|
$
|
57,119
|
$
|
78,263
|
||||||
Net Income Attributable to Common Stockholders
|
$
|
963,967
|
$
|
957,533
|
$
|
504,453
|
||||||
|
||||||||||||
Net Income Per Share of Common Stock
|
||||||||||||
Basic
|
$
|
2.82
|
$
|
3.17
|
$
|
2.12
|
||||||
Diluted
|
$
|
2.81
|
$
|
3.15
|
$
|
2.12
|
||||||
|
||||||||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||
Basic
|
341,268,923
|
302,238,065
|
238,122,665
|
|||||||||
Diluted
|
343,137,361
|
304,381,388
|
238,486,772
|
|||||||||
|
||||||||||||
Dividends Declared per Share of Common Stock
|
$
|
2.00
|
$
|
1.98
|
$
|
1.84
|
|
December 31, 2018
|
December 31, 2017
|
||||||
Assets
|
(unaudited)
|
|||||||
Investments in:
|
||||||||
Excess mortgage servicing rights, at fair value
|
$
|
447,860
|
$
|
1,173,713
|
||||
Excess mortgage servicing rights, equity method investees, at fair value
|
147,964
|
171,765
|
||||||
Mortgage servicing rights, at fair value
|
2,884,100
|
1,735,504
|
||||||
Mortgage servicing rights financing receivables, at fair value
|
1,644,504
|
598,728
|
||||||
Servicer advance investments, at fair value
|
735,846
|
4,027,379
|
||||||
Real estate and other securities, available-for-sale
|
11,636,581
|
8,071,140
|
||||||
Residential mortgage loans, held-for-investment (includes $121,088 and $0 at fair value at December 31, 2018 and December 31,
2017, respectively)
|
735,329
|
691,155
|
||||||
Residential mortgage loans, held-for-sale
|
932,480
|
1,725,534
|
||||||
Residential mortgage loans, held-for-sale, at fair value
|
2,808,529
|
-
|
||||||
Real estate owned
|
113,410
|
128,295
|
||||||
Residential mortgage loans subject to repurchase
|
121,602
|
-
|
||||||
Consumer loans, held-for-investment
|
1,072,202
|
1,374,263
|
||||||
Consumer loans, equity method investees
|
38,294
|
51,412
|
||||||
Cash and cash equivalents
|
251,058
|
295,798
|
||||||
Restricted cash
|
164,020
|
150,252
|
||||||
Servicer advances receivable
|
3,277,796
|
675,593
|
||||||
Trades receivable
|
3,925,198
|
1,030,850
|
||||||
Deferred tax assets, net
|
65,832
|
-
|
||||||
Other assets
|
688,408
|
312,181
|
||||||
|
$
|
31,691,013
|
$
|
22,213,562
|
||||
|
||||||||
Liabilities and Equity
|
||||||||
|
||||||||
Liabilities
|
||||||||
Repurchase agreements
|
$
|
15,553,969
|
$
|
8,662,139
|
||||
Notes and bonds payable (includes $117,048 and $0 at fair value at December 31, 2018 and December 31, 2017, respectively)
|
7,102,266
|
7,084,391
|
||||||
Trades payable
|
2,048,348
|
1,169,896
|
||||||
Residential mortgage loans repurchase liability
|
121,602
|
-
|
||||||
Due to affiliates
|
101,471
|
88,961
|
||||||
Dividends payable
|
184,552
|
153,681
|
||||||
Deferred tax liability, net
|
-
|
19,218
|
||||||
Accrued expenses and other liabilities
|
490,510
|
239,114
|
||||||
|
25,602,718
|
17,417,400
|
||||||
|
||||||||
Commitments and Contingencies
|
||||||||
|
||||||||
Equity
|
||||||||
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 369,104,429 and 307,361,309 issued and outstanding at December
31, 2018 and December 31, 2017, respectively
|
3,692
|
3,074
|
||||||
Additional paid-in capital
|
4,746,242
|
3,763,188
|
||||||
Retained earnings
|
830,713
|
559,476
|
||||||
Accumulated other comprehensive income (loss)
|
417,023
|
364,467
|
||||||
Total New Residential stockholders’ equity
|
5,997,670
|
4,690,205
|
||||||
Noncontrolling interests in equity of consolidated subsidiaries
|
90,625
|
105,957
|
||||||
Total Equity
|
6,088,295
|
4,796,162
|
||||||
|
$
|
31,691,013
|
$
|
22,213,562
|
|
Three Months Ended
|
Year Ended December 31,
|
||||||||||||||
|
December 31,
|
September 30,
|
||||||||||||||
|
2018
|
2018
|
2018
|
2017
|
||||||||||||
Net income attributable to common stockholders
|
$
|
348
|
$
|
184,608
|
$
|
963,967
|
$
|
957,533
|
||||||||
Impairment
|
39,315
|
9,360
|
90,641
|
86,092
|
||||||||||||
Other Income adjustments:
|
||||||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
2,945
|
4,744
|
58,656
|
(4,322
|
)
|
|||||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
(2,733
|
)
|
(3,396
|
)
|
(8,357
|
)
|
(12,617
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
(11,066
|
)
|
39,329
|
(229,253
|
)
|
(109,584
|
)
|
|||||||||
Change in fair value of servicer advance investments
|
2,751
|
5,353
|
89,332
|
(84,418
|
)
|
|||||||||||
Change in fair value of investments in residential mortgage loans
|
(73,515
|
)
|
-
|
(73,515
|
)
|
-
|
||||||||||
(Gain) loss on settlement of investments, net
|
2,222
|
11,893
|
(103,842
|
)
|
(10,310
|
)
|
||||||||||
Unrealized (gain) loss on derivative instruments
|
141,543
|
(24,299
|
)
|
113,558
|
2,190
|
|||||||||||
Unrealized (gain) loss on other ABS
|
1,718
|
(7,197
|
)
|
(10,283
|
)
|
(2,883
|
)
|
|||||||||
(Gain) loss on transfer of loans to REO
|
(2,910
|
)
|
(6,119
|
)
|
(19,519
|
)
|
(22,938
|
)
|
||||||||
(Gain) loss on transfer of loans to other assets
|
329
|
1,528
|
1,977
|
(488
|
)
|
|||||||||||
(Gain) loss on Excess MSR recapture agreements
|
4,278
|
(987
|
)
|
(979
|
)
|
(2,384
|
)
|
|||||||||
(Gain) loss on Ocwen common stock
|
15,515
|
145
|
10,860
|
(5,346
|
)
|
|||||||||||
Other (income) loss
|
2,910
|
17,843
|
28,722
|
27,741
|
||||||||||||
Total Other Income Adjustments
|
83,987
|
38,837
|
(142,643
|
)
|
(225,359
|
)
|
||||||||||
|
||||||||||||||||
Other Income and Impairment attributable to non-controlling interests
|
(5,159
|
)
|
(4,633
|
)
|
(22,247
|
)
|
(30,416
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights
|
160,947
|
(44,192
|
)
|
(65,670
|
)
|
(155,495
|
)
|
|||||||||
(Gain) loss on settlement of mortgage loan origination derivative instruments
|
(3,991
|
)
|
2,757
|
(1,234
|
)
|
-
|
||||||||||
Gain on securitization of originated mortgage loans
|
8,757
|
-
|
8,757
|
-
|
||||||||||||
Non-capitalized transaction-related expenses
|
3,162
|
5,274
|
21,946
|
21,723
|
||||||||||||
Incentive compensation to affiliate
|
29,731
|
23,848
|
94,900
|
81,373
|
||||||||||||
Deferred taxes
|
(67,374
|
)
|
(1,865
|
)
|
(80,054
|
)
|
168,518
|
|||||||||
Interest income on residential mortgage loans, held-for sale
|
600
|
5,906
|
13,374
|
13,623
|
||||||||||||
Limit on RMBS discount accretion related to called deals
|
(45,473
|
)
|
(2,914
|
)
|
(58,581
|
)
|
(28,652
|
)
|
||||||||
Adjust consumer loans to level yield
|
734
|
(6,760
|
)
|
(21,181
|
)
|
(41,250
|
)
|
|||||||||
Core earnings of equity method investees:
|
||||||||||||||||
Excess mortgage servicing rights
|
2,669
|
4,468
|
13,183
|
13,691
|
||||||||||||
Core Earnings
|
$
|
208,253
|
$
|
214,694
|
$
|
815,158
|
$
|
861,381
|